Saturday, September 24, 2011

As apps become more lucrative than music, no wonder iTunes is projected to rake in a cool $6 billion in the combined 2011 music and app revenues. Be that as it may, Apple’s content store has seen little success in digital publishing due to a conflict of interests which is causing significant friction between Apple and publishers. In fact, Apple is under heightened pressure to loosen up its tight control over digital newspapers and magazines on iPad. Reuters reports:

Apple’s tight control over media content on its iPad is about to fall foul of some of France’s most powerful newspapers and magazines, which hope that by teaming up they can stop the technology giant from dictating the terms of their distribution. The bid by eight publications, including newspaper Le Figaro and sports daily L’Equipe, is the latest sign of growing disillusionment among some global publishers over what they consider Apple’s rigid terms and high commission of 30 percent.Without “key concessions”, these publishers will not sell their digital magazines and newspapers on the Newsstand, Apple’s upcoming digital kiosk launching soon with iOS 5. Moreover, the French publications have a digital newsstand of their own which they will use to push digital editions, subscriptions and bundled offers to iPad owners. This comment from Le Figaro executive Pascale Pouquet caught our attention:

We’ll have to be ready to accept to lose some sales if we cannot come to terms with Apple,” he said. “But sometimes it’s better to cut off a finger than to sever the whole arm.So publishers would rather “lose some sales” than make some money on iTunes? That’s a weird strategy. Print people should know better and remember that Apple generally does not budge to pressure. Pouquet’s school of thought brings to mind the following Steve Jobs comment on monetizing news made at last year’s D8 conference at Rancho Palos Verdes, California:

I can tell you as one of the largest sellers of content on the internet to date – price it aggressively and go for volume.Granter, the uniform, low price approach did work in music, but it’s not striking chord with print die-hards, most of whom are stuck in the old ways. In any case, a growing disconnect between the print folks and Apple will test the company’s practice to impose its thirty percent cut on all items its content partners sell in iTunes. Now, some people warn Apple is at a disadvantage because media mogul Jobs personally cut crucial media deals with content owners. While that may have been the case, there’s now a new guy at Apple to talk to content industries…